As I predicted on the day before the election, if Obama won, the Dow would fall to 7,500. Well, it did.
Of course, there are mega-financial pressures completely unrelated to Obama’s election.
But, he left some undetonated campaign grenades that unsettle the market. Will he raise taxes on businesses and investors next year? Last word from him: yes. Will he protect UAW jobs in Detroit with a bailout? Last word: yes. Who will be hisTreasury Secretary? Last word: hold your pants on.
At minimum, Obama should name Paulson’s successor and pledge to hold tax rates where they are until they expire naturally in 2010.
If he wanted to do something bolder, he should cut capital gains tax rates to zero for stocks bought from now until the end of 2009.
Regardless, he’s got to quit playing paddycake with Hillary, come out of hiding, and give investors some reason to believe.
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Note: I stand by my other market prediction: if Franken wins and Chambliss loses — the Dow will have it’s largest 1-day decline ever — at least 1,000 points. Hope this one goes unverifiable.
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